Today, Ben did a great post lashing out the FUD around the concept os SaaS (Software as a Service). His post got me fired up to write the arguments I give in different forums to highlight the difference between SaaS and ASP. I hope we could put an end to the tactics of the people behind such FUD.

SaaS and ASP have a somewhat similar philosophy but there are many differences that makes SaaS more competent in the marketplace than the ASP in the previous era. Lemme, explain the differences in this post.

• ASP was single tenancy whereas SaaS has multi tenancy. This offers SaaS the much needed ability to scale. ASP was limited to single organization and hence high cost of implementation. Since SaaS is shared by multiple organizations, without compromising on the reliability, security and privacy, the cost for businesses is very minimal compared to the implementation of ASP.
• In many cases, the underlying cloud is built upon open source software. The application stack also uses open source software overwhelmingly. This reduces the cost of infrastructure by several fold, thereby, bringing down the cost of implementation to a much smaller level. Today, a small business having three employees can have CRM for free and a company with 5 employees can have it for as low as $24 per month. Many SaaS vendors rely heavily on open source software and the associated cost savings (plus the cost savings due to multi tenancy) is passed on to the customers and it was not the case with ASP.
• Some SaaS vendors offer the source code under one of the open source licenses. This helps organizations some reliability in the case of SaaS vendor going out of business. Businesses can take the source code and their data and host it anywhere in the cloud. Since the cost of cloud infrastructure is negligible, this option saves a huge amount of money for businesses compared to the ASP approach.
• Unlike the ASP approach, SaaS vendors can release a particular version and it shows up for all the customers. This reduces the time and cost involved in support and security implementation. Unlike ASP, all the SaaS customers will be using the same version of the app.
• Another important aspect of SaaS vis a vis ASP is the pay as you go model. This is very important from small business perspective. This kinda approach is akin to utilities where you pay only for what you use rather than a fixed amount every month.

There are various other advantages of SaaS over ASP but I am just pointing out to some of the advantages that are important according to many industry analysts and evangelists. I hope these FUD promoters stop messing around with SaaS and go elsewhere.